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Valkyrie Bitcoin Miners ETF (WGMI - Free Report) , which provides exposure to the bitcoin mining industry, has gained about 235.6%, becoming the top-performing ETF of 2023.
Although most of the stocks in WGMI’s portfolio delivered strong returns this year, a few have quadrupled. These include Bitfarms Ltd. (BITF - Free Report) , Marathon Digital Holdings (MARA - Free Report) , Bit Digital (BTBT - Free Report) , CleanSpark Inc. (CLSK - Free Report) and Iris Energy (IREN - Free Report) .
Bitcoin has exhibited a remarkable performance, marking a significant year for cryptocurrency. The world's largest cryptocurrency started 2023 just above $US16,000 and climbed to a 12-month high of $45,000 in early December. In fact, bitcoin's performance in 2023 has outpaced other assets like global stocks and gold. The derivative market has also seen significant interest, with record levels of open interest in Bitcoin futures and options (read: Bitcoin Reaches $42,000: 5 ETFs More Than Double in 2023).
A few key factors sparked the astounding surge:
Imminent Regulatory Approval for Bitcoin ETFs: The crypto industry is keenly awaiting the SEC's decision on applications for the first U.S. spot Bitcoin ETFs, with firms like BlackRock Inc. at the forefront. Bloomberg Intelligence suggests that a series of these products could receive approval by January 2024. Such a development would not only legitimize Bitcoin in the eyes of mainstream investors but also provide a more accessible avenue for investment, thereby potentially attracting a fresh influx of capital into the crypto market.
Fed Rate Cut Bets: Investors’ expectation that the Fed will soon pause its interest-rate hikes has made cryptocurrencies stand out this year. The Fed has indicated a possible end to its rate-hiking cycle, with expectations of lower borrowing costs in 2024. In the latest meeting last week, the central bank penciled in three rate cuts for 2024 that will likely serve as a “positive boost” for cryptocurrencies and crypto stocks (read: Sector ETFs to Benefit From Fed Rate Cut Talks).
Bitcoin Halving: It is a pre-coded event in the Bitcoin protocol that happens every 210,000 blocks — roughly every four years. The process reduces the reward miners receive for validating blockchain transactions, thus controlling the issuance of new Bitcoin and maintaining its scarcity. The next Bitcoin halving is expected in April 2024, which will slow down the rate of new Bitcoin creation and will contribute to Bitcoin's scarcity and potential price increase.
The Collapse of Silicon Valley Bank: The banking chaos has proven to be the most significant advantage for Bitcoin. This is especially true as the failure of Silicon Valley Bank sparked worries over financial stability across the globe, raising the demand for Bitcoin. The crypto is often viewed as a reliable store of value amid market turmoil.
Launch of a New Crypto Exchange: The launch of EDX Markets, a new digital asset exchange backed by major Wall Street players such as Fidelity, Charles Schwab and Citadel Securities, probably contributed to the sentiment that the infrastructure and acceptance of digital assets were improving, thus sparking more interest in Bitcoin.
The combination of factors has rekindled interest in the crypto market, signaling positive sentiment among retail and institutional investors. With expectations of interest rate cuts and greater demand from ETFs, most traders anticipate the rally to continue in 2024.
Let’s take a closer look at the fundamentals of WGMI.
WGMI in Focus
Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket with a double-digit concentration on the top five firms.
Valkyrie Bitcoin Miners ETF has amassed $36.8 million in its asset base while trading in an average daily volume of 223,000 shares. It charges 75 bps in annual fees (read: 5 Best-Performing Technology ETFs of 2023).
Best-Performing Stocks of WGMI
Bitfarms is a Bitcoin mining company. It provides vertically integrated mining operations with onsite technical repair, proprietary data analytics and company-owned electrical engineering and installation services to deliver operational performance and uptime. The stock has skyrocketed 575% this year and accounts for an 8.2% share in WGMI.
Bitfarms earnings are expected to decline 4.8% in 2024. It has a Zacks Rank #3 (Hold) and a Growth Score of B.
Marathon Digital is a digital asset technology company that mines cryptocurrencies. It is focused on the blockchain ecosystem and the generation of digital assets. The stock has jumped 435% and accounts for a 13.5% share in the ETF.
Marathon Digital has an estimated earnings growth rate of 133.3% for the next year and carries a Zacks Rank #3.
Bit Digital jumped about 433.3% this year and makes up for a 4.4% share in the WGMI basket. The stock has a Zacks Rank #3 and a Growth Score of A.
CleanSpark is engaged in the mining of cryptocurrencies. It has rallied 421.5% this year and makes up for 16.5% in ETF.
CleanSpark has an estimated earnings growth rate of 24% for the fiscal year ending September 2024 and a Zacks Rank #3.
Iris Energy is a Bitcoin mining company that builds, owns and operates data center infrastructure with a focus on entry into regions where it can access abundant and/or under-utilized renewable energy to power its operations. The stock has surged 380.8% this year and accounts for a 10.1% share in the WGMI basket.
Iris Energy has an estimated earnings growth rate of 97.8% for the fiscal year ending June 2024 and a Zacks Rank #3.
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Bitcoin Miner ETF Tops in 2023: 5 Best Stocks
Valkyrie Bitcoin Miners ETF (WGMI - Free Report) , which provides exposure to the bitcoin mining industry, has gained about 235.6%, becoming the top-performing ETF of 2023.
Although most of the stocks in WGMI’s portfolio delivered strong returns this year, a few have quadrupled. These include Bitfarms Ltd. (BITF - Free Report) , Marathon Digital Holdings (MARA - Free Report) , Bit Digital (BTBT - Free Report) , CleanSpark Inc. (CLSK - Free Report) and Iris Energy (IREN - Free Report) .
Bitcoin has exhibited a remarkable performance, marking a significant year for cryptocurrency. The world's largest cryptocurrency started 2023 just above $US16,000 and climbed to a 12-month high of $45,000 in early December. In fact, bitcoin's performance in 2023 has outpaced other assets like global stocks and gold. The derivative market has also seen significant interest, with record levels of open interest in Bitcoin futures and options (read: Bitcoin Reaches $42,000: 5 ETFs More Than Double in 2023).
A few key factors sparked the astounding surge:
Imminent Regulatory Approval for Bitcoin ETFs: The crypto industry is keenly awaiting the SEC's decision on applications for the first U.S. spot Bitcoin ETFs, with firms like BlackRock Inc. at the forefront. Bloomberg Intelligence suggests that a series of these products could receive approval by January 2024. Such a development would not only legitimize Bitcoin in the eyes of mainstream investors but also provide a more accessible avenue for investment, thereby potentially attracting a fresh influx of capital into the crypto market.
Fed Rate Cut Bets: Investors’ expectation that the Fed will soon pause its interest-rate hikes has made cryptocurrencies stand out this year. The Fed has indicated a possible end to its rate-hiking cycle, with expectations of lower borrowing costs in 2024. In the latest meeting last week, the central bank penciled in three rate cuts for 2024 that will likely serve as a “positive boost” for cryptocurrencies and crypto stocks (read: Sector ETFs to Benefit From Fed Rate Cut Talks).
Bitcoin Halving: It is a pre-coded event in the Bitcoin protocol that happens every 210,000 blocks — roughly every four years. The process reduces the reward miners receive for validating blockchain transactions, thus controlling the issuance of new Bitcoin and maintaining its scarcity. The next Bitcoin halving is expected in April 2024, which will slow down the rate of new Bitcoin creation and will contribute to Bitcoin's scarcity and potential price increase.
The Collapse of Silicon Valley Bank: The banking chaos has proven to be the most significant advantage for Bitcoin. This is especially true as the failure of Silicon Valley Bank sparked worries over financial stability across the globe, raising the demand for Bitcoin. The crypto is often viewed as a reliable store of value amid market turmoil.
Launch of a New Crypto Exchange: The launch of EDX Markets, a new digital asset exchange backed by major Wall Street players such as Fidelity, Charles Schwab and Citadel Securities, probably contributed to the sentiment that the infrastructure and acceptance of digital assets were improving, thus sparking more interest in Bitcoin.
The combination of factors has rekindled interest in the crypto market, signaling positive sentiment among retail and institutional investors. With expectations of interest rate cuts and greater demand from ETFs, most traders anticipate the rally to continue in 2024.
Let’s take a closer look at the fundamentals of WGMI.
WGMI in Focus
Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket with a double-digit concentration on the top five firms.
Valkyrie Bitcoin Miners ETF has amassed $36.8 million in its asset base while trading in an average daily volume of 223,000 shares. It charges 75 bps in annual fees (read: 5 Best-Performing Technology ETFs of 2023).
Best-Performing Stocks of WGMI
Bitfarms is a Bitcoin mining company. It provides vertically integrated mining operations with onsite technical repair, proprietary data analytics and company-owned electrical engineering and installation services to deliver operational performance and uptime. The stock has skyrocketed 575% this year and accounts for an 8.2% share in WGMI.
Bitfarms earnings are expected to decline 4.8% in 2024. It has a Zacks Rank #3 (Hold) and a Growth Score of B.
Marathon Digital is a digital asset technology company that mines cryptocurrencies. It is focused on the blockchain ecosystem and the generation of digital assets. The stock has jumped 435% and accounts for a 13.5% share in the ETF.
Marathon Digital has an estimated earnings growth rate of 133.3% for the next year and carries a Zacks Rank #3.
Bit Digital is an emerging bitcoin mining company. It has an estimated earnings growth rate of 28.6% for next year (read: Bitcoin Up Triple-Digits This Year: ETFs in Focus).
Bit Digital jumped about 433.3% this year and makes up for a 4.4% share in the WGMI basket. The stock has a Zacks Rank #3 and a Growth Score of A.
CleanSpark is engaged in the mining of cryptocurrencies. It has rallied 421.5% this year and makes up for 16.5% in ETF.
CleanSpark has an estimated earnings growth rate of 24% for the fiscal year ending September 2024 and a Zacks Rank #3.
Iris Energy is a Bitcoin mining company that builds, owns and operates data center infrastructure with a focus on entry into regions where it can access abundant and/or under-utilized renewable energy to power its operations. The stock has surged 380.8% this year and accounts for a 10.1% share in the WGMI basket.
Iris Energy has an estimated earnings growth rate of 97.8% for the fiscal year ending June 2024 and a Zacks Rank #3.